Rising dispersion creates opportunity in a ‘Fat & Flat’ market
We have argued that the market is likely to be stuck in a 'Fat & Flat' band this year, trading in a
volatile trading range, but achieving low absolute returns. However lower index returns do not
preclude high dispersion of returns beneath the index. This is particularly evident in dispersion of
valuation and returns across styles/factors and sectors. Stock dispersion is picking up, but is likely
to remain frustratingly low relative to sectors and styles, in our view, while investors remain
focused on swings in macro drivers such as growth, inflation, commodity prices and interest rates.
Full Note attached